You must file a Form 1098 for any interest paid to them on the loan for the previous year if it was more than $600.
How to file Form 1098:
1. Gather payment records from the borrower
2. Download Form 1098: Mortgage Interest Statement and its corresponding instructions. The form and instructions are available from the Internal Revenue Service website at www.irs.gov.
3. Enter your information following the instruction.
4. Submit Copy A of the completed form to the IRS. Details regarding the address for paper submissions and the procedure for electronic submissions are found in the IRS Publication entitled "General Instructions for Certain Information Returns (Forms 1097, 1098, 1099, 3921, 3922, 5498, and W-2G)." Consult the section entitled "Where to File" for the address to send paper reports and the section entitled "Electronic Filings" to get details regarding electronic submission.
5.Send Copy B of the completed form to the borrower. Mail the form to the official address as reported on the form. Use a proof of mailing service such as registered or certified mail.
6. Retain Copy C for your records. Keep a copy of the completed form for future reference.
